October 19, 2022
The Factory Act B.E. 2535 (1992) is one of the most important laws regulating manufacturing businesses in Thailand. It applies to businesses either with machinery of 50 horsepower or more in total, or with a minimum of 50 workers in a facility that conducts “factory work” as defined under related ministerial regulations.
The act was recently amended to extend the period of validity for factory licenses and to make other miscellaneous changes that facilitate business. However, the act’s criminal liabilities were left unchanged, and they remain a vital tool for the authorities to exert control over relevant standards and prosecute violations. Both fines and imprisonment are available as sanctions under the law.
Examples of common violations of the Factory Act and their potential penalties include:
Setting up and operating a factory without acquiring a license: up to two years’ imprisonment, a fine of up to THB 200,000 (approx. USD 5,365), or both.
Operating with noise level exceeding the standard set by the Ministry of Industry: a fine of up to THB 200,000.
Not displaying a factory license in an open and easily visible location in the factory: a fine of up to THB 5,000 (approx. USD 134).
Doing a test run of machinery prior to the start of the factory operations without notifying the authorities: a fine of up to THB 20,000.
As factory activities are regulated in considerable detail, overlooking a minor change could potentially put the company at risk. The risk of violating the Factory Act increases when compliance is not a proactive policy—such as by instituting systems or safeguards to ensure adherence to the rules.
Criminal Liability
Violation of the Factory Act is especially a concern because criminal liability under the act is not limited to juristic persons (i.e., companies) but also applies to the director, manager, and any other person responsible for the offense.